[§557A-505]  Income taxes.  (a)  A tax
required to be paid by a trustee based on receipts allocated to income shall be
paid from income.



(b)  A tax required to be paid by a trustee
based on receipts allocated to principal shall be paid from principal, even if
the tax is called an income tax by the taxing authority.



(c)  A tax required to be paid by a trustee on
the trust's share of an entity's taxable income shall be paid proportionately
from:



(1)  Income to the extent that receipts from the
entity are allocated to income; and



(2)  Principal to the extent that:



(A)  Receipts from the entity are allocated to
principal; and



(B)  The trust's share of the entity's taxable
income exceeds the total receipts in paragraphs (1) and (2)(A).



(d)  For purposes of this section, receipts
allocated to principal or income shall be reduced by the amount distributed to
a beneficiary from principal or income for which the trust receives a deduction
in calculating the tax. [L 2000, c 191, pt of §1]